Wednesday 10 Mar 2010
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| Thursday, 04 February 2010 00:00 |
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In 2009 all of us were enjoying the bullish movement in capital market. DJIA rose back to 10.000 from 6.400. In Asia Nikkei, Hangseng, Jakarta Composite Index also moved in same way. Now we are at the end of 2009, the biggest question is will the bullish extend? Or the bear army will come back in 2010? To be honest whether bull or bear we must make a profit to support our live. But how to make a profit if we do never realize to the major trend reversal? What is the most important thing to be understood by trader? That is the trend reversal price and time. In 2010 we are not sure the bull will extend. The big problem in US financial system is not over yet.
The price and time harmony has warned us about this issue. Let’s imagine how if the 2008 crash is only the beginning of the real crash? If the bear comes back in 2010 will we ready?
 CEO Briefing What will be happened in 2010? This is the big issue of financial and capital market. In my opinion 2010 is the gate of major bearish continuation. Let’s take DJIA index for the example. The highest peak in 14.000 is the end of secular trend bullish movement and may follow with major trend correction. According to the nature harmony theory on the market, we have to admit that price always moves in 3 fractals. Many people stand to the fundamental reasons and use it as a primary guidance to determine the market direction. I cannot see that is a valid and accurate way to predict the market movement. In late 2008, I announced the end of correction target around 5.000 – 6.500, in fact the lowest DJIA was at 6.400. Therefore, even though hard to say, we still have to believe that the nature harmony can predict market movement accurately. Now you are reading my opinion about the market outlook in 2010 – 2012 based on the nature harmony in technical analysis. I can say for sure, I will not sit here with you if this method useless. Try to believe and use it as a reference to manage your portfolio.
  As we know the average must confirm each other just like Charles H Dow aid in his venerable Law. Global market movement eventually happened in a period of 10 years. William Delbert Gann, one of historical trader from US put a high respect to this time cycle. Now let’s take a look to the ow Jones Industrial Average chart from 1900 – 2009 and mark it using lliott Wave method.The picture below is DJIA chart from 1900 – 2009. We call this a secular trend chart for 20 years period. The impulse wave can be seen very bvious from the beginning of trading day until today. Based on Elliott ave principles we can found that 5 waves movement has completed at 4.000. The next phase will be possible A,B,C correction in large degree. Simply says the next 2 years will be a correction for prior secular trend bullish, started in 2008. Of course this not a good news for investment banking and share holders. But we still have to face it and make a profit. Later we will discuss about DJIA index and world market in 2010.   Five waves movement has completed in 2007 at level 14.000. The next will be a possible A,B,C correction. Like or not we have to face it. The crash happened in 2008 was a formation of wave A. DJIA dropped from its all time high to 6.400 in 17 months from middle 2007 to late 2008. In 2009 we can saw the optimism of all investors and traders to re‐invest their money to the stocks market, and the result is upside movement from early 2009 till today. The first law of analysis is you have to find the answer whether the newest price movements is a trend or countertrend. Unfortunately I am afraid to say that the upside movement during 2009 was a countertrend or only a correction. We can mark this correction as wave B, which is still has opportunity to climb more than 11.000. But honestly the upside should be near a completion. Let’s take a look to the next chart.
 Traders and investors have to take serious attention to this condition. Since momentum and price always move in a harmony we have to realize that DJIA upside may be limited when price arrived above 10.000. We will use the art of Elliott Wave analysis and Astronacci© trading system to determine the price and time cycle in DJIA. The peak at 14.000 was an end of secular trend wave 5. On October 30th,2007 DJIA had started a big correction signal. It fell to 6.400 for 17 months to March 2009. We are afraid to say that this is just a beginning of a major correction movement. Downside movement from 2007 to 2009 is wave A which is consists of 3 wave movement.
Based on Astronacci© time analysis we analyze the width and angle of correction. DJIA has been declined for 17 months and its equal with 17 monthly bars, 17 monthly bars is equal with 74 weeks bar. In Astrology there are few important counts of week numbers, and one of them is 78, pretty near with total weekly correction bars in DJIA. Therefore the width of the correction was valid. Then in 2007-2009 correction prices has overlapped the bottom of October 2002 correction, indicated the decline is a countertrend wave or entering major wave A correction. Until today it was moving 3 fractals wave inside the wave A. In 2009 price goes up from March to December for 10 monthly bars. It is equal with 41 weekly bars. We also note for the important count of month rules. Astrology mentioned in 12 months cycle the prices may change significantly. The 10 months rebound is very near with the 12 months astrology cycle and the 41 weekly bars is equal with 45 weeks important count. We also found two price targets of this rebound (correction) are around 10.500 or 11.600. Both of them are the meeting point of 50% - 66% retracement with 100% - 162% alternate price projection. If the price can close above 10.500 for at least 4 weeks, it will reach 11.600 – 12.000 before reversal. The conclusion of this analysis is the upside movement from March to December is surely a wave B that consist of 3 fractals. This rebound (correction) may extend until the next 2 months to reach the price correction target.
 The Astronacci Momentum is one of our tools to determine when price meet the time, you can read it as same as oscillator indicator. Astronacci Momentum indicator is hung at an extreme overbought area, followed by price which is near the end of rebound (correction) target, and the end of time cycle (approaching 12 months cycle or 45 weeks cycle). There will be no reversal before price meet time target. In this case, the Astronacci Momentum has arrived at its destination before the other. Therefore it should wait for price and time to meet before big reversal in wave C starts.
Conclusion For now we have 3 factors that may influence price movement. First is a time cycle. The rebound (correction) should be limited when it was approaching 12 months cycle or 45 weeks cycle. Second, Price almost reaches the end of correction target at retracement 50%-66% and 100%-162% alternate price projection target (We will discuss this later). The last is Astronacci Momentum has arrived at final destination target.   Why we have to analyze DJIA index in high detail analysis? As we known DJIA has a strong influence to all markets in all continents. The pattern and price usually formed in same position. Therefore it will be a must for us to know the leader destination. After learn from monthly chart now we go for smaller time frame, weekly chart. In weekly chart we will examine the detail of March – December 2009 rebound to have a confirmation whether it was an impulsive or a corrective wave. First of all we have to remember the primary characteristic of impulsive wave. An impulsive wave should not overlap its prior peak or bottom. It will moves in good angle of climb, at least 45 degrees up or down with no overlap. In DJIA weekly chart there are 3 obvious waves movement only. We recognized it as ABC correction. Take a look at chart below, the ABC upside with green line is a corrective wave of major downtrend. The upside movement has been rose for 10 months / 42 weeks until 10.500 in December 2009. Get the end of wave c correction value is very important to unload all investment in long or call position in stocks and option.
There are 2 important zones for the end of wave c. Zone 1 is around 10.400 – 10.600 and zone 2 is around 11.600 – 12.000. Zone 1 is typical target of wave C and zone 2 is maximum target of wave C. Weekly oscillator tells the same direction. Upside will continue in a few weeks. This upside movement should be used for exit not new buy.
Where is the next destination after reach the end of wave c? The downside from 14.000 to 6.460 formed in 5 corrective waves, and it was marked as A. Based on corrective wave rules when wave A subdivide by 5 waves it will form 5-3-5 Zig Zag correction. After price reaches the end of C correction or B, it may decline for 5 waves to fulfill highest degree ABC correction target. It may happened when weekly momentum makes 2-3 times bearish momentum reversal.
We predict the price reversal may happened around February – March 2010, or Maximum on September 21th 2010. During February to September price movement may moves in sideways to up.
 THE END OF WAVE C TARGET Correction target can make us really unhappy, but we have to prepare for the worst part to survive The phi 0.618 or an equal movement
 Market respects to geometry and mathematics. By using the golden ratio number we can predict where is the exact end of a price movement. The end of wave C correction can be predicted using Fibonacci ratio. The Fibonacci and wave can never be separated. They must walk together. We call them the harmony between pattern and price. The end of wave usually meets the golden ratio. Now we will explain the end of wave C and price target rules.Wave C characteristic
Wave C is a third movement of fractals, almost same with wave 3. Wave C more than likely overlaps wave A bottom or top. Wave C is a shadow of A and B, a reaction of prior 2 movements. Wave C minimum price target is 62% alternate price projection of A from B, and typical target around 100% alternate price projection. Wave C sometimes subdivided into 5 waves and then extends to 162% alternate price projection. DJIA will enter wave C soon and it will reach at least a minimum target. There are 2 options to determine its target. The master is at the end of wave B. If the end of wave B around 10.500-10.600 the minimum wave C target will be 5.500 – 5.600 and typical target around 2.700 – 2.800. If the end of B around 11.600 – 12.00 the minimum wave C target will be around 6.800 and typical target around 4.000. This correction may takes minimum 16 months straight after wave B target has reached. THE END OF C TARGET WILL BE REACHED IN JUNE 21th 2011 – DECEMBER 21th 2011 at Summer Solstice or Winter Solstice Astrological cycle.  |
| Last Updated on Thursday, 04 February 2010 13:39 |
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